Errors and omissions insurance, also known as E&O insurance or professional liability insurance, is a type of liability insurance that protects companies, their workers, and other professionals against claims of inadequate work or negligent actions made by clients. It is a common form of business insurance that protects an entity should someone accuse that company of making a mistake. E&O insurance generally covers judgments, attorney fees, court costs, and settlements up to the limits of the policy. This kind of liability insurance is generally required for professional advice-giving or service-providing businesses. Without E&O insurance, a company can be held liable for up to millions in damages plus the fees associated with a legal team.

Errors and omissions insurance policies vary from company to company and are written to reflect inherent risks and common exposures particular to different types of businesses. Businesses that provide a service to customers should carry errors and omissions insurance, including many types of professionals such as accountants, engineers, advertising firms, educators, marketing firms, and more.

It is important to note that errors and omissions insurance does not cover every type of liability claim. This insurance won’t help your business with claims of illegal acts and purposeful wrongdoing, such as intentionally breaking the law or deceiving your customers or clients, bodily injury or property damage that your business causes, or employee injuries or illnesses caused by their work.

In summary, errors and omissions insurance is a type of liability insurance that protects businesses and professionals against claims of inadequate work or negligent actions made by clients. It is generally required for professional advice-giving or service-providing businesses and can help protect a company from financial loss due to legal fees and settlements associated with a claim.